This is Part 1 of Brazilstrat’s series about the Brazilian Unicorns. Links to the other parts can be found here: “Part 2 – Nubank”; “Part 3 – Wildlife Studios”; “Part 4 – iFood”; “Part 5 – Loggi”; “Part 6 – QuintoAndar”; “Part 7 – Ebanx”; “Part 8 – Loft”; and “Part 9 – Gympass”.
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According to Investopedia, a unicorn is a “privately held startup company with a value of over $1 billion” . The term was first published in 2013 by Aileen Le, founder of Cowboy Ventures, to mean “U.S.-based software companies started since 2003 and valued at over $1 billion by public or private market investors” .
With eight private startups valued at more than $1 billion, Brazil has the world’s seventh largest unicorn population by Investopedia’s definition, behind the US (220), China (109), UK (24), India (20), Germany (12), and South Africa (12). As per March 2020 the global total is 451.
In this article an introduction is given to each of Brazil’s eight unicorns, focusing on business model, history, market, founding team, investors, and financing. In addition to giving an overview of the Brazilian startup ecosystem, the aim is to provide insight into Brazil-specific challenges and opportunities.
The eight unicorns are summarized in the table below.
|Company||Industry||Founded year||Founded location||Became Unicorn||Funding raised||Valuation est.|
|Loft||Real estate||2018||São Paulo||Jan 2020||$263m||$1b|
|Nubank||Banking||2013||São Paulo||Mar 2018||$909m||$10b|
|Loggi||Delivery||2013||São Paulo||Jun 2019||$295m||$1b|
|Gympass||Fitness/ wellness||2012||São Paulo||Jun 2019||$300m + 4 undisclosed rounds||$1.1b|
|QuintoAndar||Real estate||2013||São Paulo||Sep 2019||$335.3m||$1b|
|Ebanx||Payment||2012||Curitiba||Oct 2019||$30m + undisclosed round||$1b|
|Wildlife Studios||Mobile gaming||2011||São Paulo||Dec 2019||$60m + undisclosed round||$1.3b|
|iFood||Food delivery||2011||São Paulo||Nov 2018||$591.9m||$1b|
- All but two of the companies operate in industries with significant and idiosyncratic improvement potential in Brazil, especially related to bad services, slow processes, bureaucracy and poor logistics. The exceptions are Gympass and Wildlife Studios, which do not provide solutions specifically related to Brazilian problems. Gympass connects employers with gyms and fitness centres while Wildlife Studios makes mobile games for the global population.
- All except Loft was founded between 2011 and 2013, at a time when Brazil received a lot of international attention as one of the promising BRIC countries (Brazil, Russia, India, and China), and before Brazil’s political and economic crises that started in 2014.
- All except Ebanx were founded in São Paulo where they also have their main office, although Gympass’ global organization has been run from New York since 2018. This is not surprisingly as the city of São Paulo accounts for more than a tenth of Brazil’s GDP, has the country’s largest population with more than 12 million so-called paulistas, and is home to 63% of established multinationals in Brazil (64).
- None of the companies achieved unicorn status before March 2018, illustrating the strong growth seen in the Brazilian startup ecosystem over the last few years. Note that this article does not include Brazilian tech companies/startups that have been acquired or have listed their shares on a stock exchange.
- More than $2.78 billion have been raised between the eight unicorns, averaging $348 million per company, not including undisclosed funding.
- There is a total of 28 founders, although some of these have had more central roles than others in forming the companies. Some characteristics of the founder group can be summarized as follows.
- Only two are women, namely Cristina Junqueira, VP Branding at Nubank, and Mariana Paixao, Head of Operations at Loft.
- Five are from outside of Brazil, spread between three companies: Colombian CEO David Velez and American CTO Edward Wible of Nubank; the French CEO Fabien Mendez of Loggi; and the two co-CEOs of Loft, Florian Hagenbuch from Germany (who grew up in Brazil) and Mate Pencz (who grew up in Germany).
- 21 still work at their unicorns, and all but iFood are currently headed by one of its co-founders. The group of seven who have left includes iFood’s entire team of five co-founders in addition to one each from Gympass and Loggi.
- All 28 had completed higher education before founding their unicorn and ten of them got at least part of their education from the public University of São Paulo (USP). Other notable institutions include Stanford, where four of the founders studied before their unicorn ventures, Harvard with two, Wharton with two, Ibmec and FGV in Brazil with two each, MIT with one, and Princeton with one.
- Ten had at least part of their professional background in finance, eight in other business, and seven in consulting. Overall, the founders seem to have a more business oriented than technical background. Three of them had worked at Boston Consulting Group, three at Goldman Sachs, and two each at Morgan Stanley, McKinsey and JP Morgan.
- Exactly half the group had founded companies prior to the unicorns.
Brazilian tech companies that have reached valuations above $1 billion as a result of being acquired, or by listing their shares on a stock exchange, are excluded from this article although many consider them unicorns. These include:
- 99, a ride hailing company that was acquired by its Chinese peer Didi Chuxing in January 2018 at a $1 billion valuation;
- Arco Educação, an educational software company that was listed on Nasdaq in September 2018;
- Stone Pagamentos, a provider of online payment solutions that was listed on Nasdaq in October 2018;
- Movile, a Brazilian firm focusing on investing in mobile technology, which technically became a unicorn as a result of the transaction that made iFood one. Movile is not included as a separate company here however as it can be regarded more as a Brazilian venture capital firm than as a technology startup.
The below table lists twelve Brazilian and 34 international investment companies that have invested in the Brazilian unicorns. 26 of the investment companies are American, but the list does not include individual investors. The acquired and publicly traded startups mentioned under “Exclusions” are however included here as limitations in defining the unicorn term make them no less successful for their investors.
- All unicorns but Ebanx are backed by at least one Brazilian institutional investor if we include Kaszek Ventures, which is originally from Argentina but is presently based in both Buenos Aires and São Paulo, and Valor Capital Group, which in addition to São Paulo also is based in New York and Menlo Park, California.
- All eight unicorns are backed by at least one institutional investor from outside Brazil.
- Ten of the twelve Brazilian investors have their (at least Brazilian) headquarter in São Paulo.
- The Brazilian firm GE32 Capital and Kaszek Ventures have made the most unicorn investments with four each, if we also include the acquired company 99. It is however worth noticing that both GE32 and Canary both are funded by Loft co-founders Florian Hagenbuch and Mate Pencz.
- Valor Capital Group, Dragoneer Investment Group of San Francisco, General Atlantic of New York, QED Investors of Alexandria, Virginia, and the Japanese giant Softbank come in second with three Brazilian unicorn investments each if we also include the publicly traded companies Stone and Arco Educação.
|Company||Based||Brazil unicorn Investments|
|Flame Ventures||Rio de Janeiro||QuintoAndar|
|GE32 Capital||São Paulo||QuintoAndar; Gympass; Wildlife; 99|
|Iporanga Ventures||São Paulo||Loggi|
|Kaszek Ventures||Buenos Aires & São Paulo||Nubank; QuintoAndar; Loggi; Gympass|
|Monashees||São Paulo||Loft; Loggi|
|Movile||Campinas (São Paulo state)||iFood|
|Provence Capital||São Paulo||Gympass|
(Separate from Redpoint Ventures)
|Valor Capital Group||São Paulo, New York, and Menlo Park, California||Loft; Gympass; Stone|
|Velt Partners||São Paulo||Loggi|
|Warehouse Investimentos||São Paulo||iFood|
|Acacia Capital Partners||Cambridge, UK||QuintoAndar|
|Andreessen Horowitz||San Francisco Bay Area||Loft|
|Benchmark Capital||San Francisco||Wildlife|
|Bessemer||Redwood City, California||Wildlife|
|DST Global||Hong Kong||Nubank|
|Dragoneer Investment Group||San Francisco||Loggi; Nubank; QuintoAndar|
|Endeavor Catalyst||New York||Ebanx|
|Fifth Wall Ventures||Venice, California||Loft; Loggi|
|Founders Fund||San Francisco||Nubank|
|FTV Capital||San Francisco||Ebanx|
|General Atlantic||New York||QuintoAndar; Gympass; Arco Educação|
|GGV Capital||Menlo Park, California||Loggi|
|IFC Venture Capital Group||Washington DC||Loggi|
|Innova Capital||Warsaw, Poland||iFood|
|QED Investors||Alexandria, Virginia, US||Loft; QuintoAndar; Nubank|
|Prosus & Naspers||Amsterdam||iFood|
|Qualcomm Ventures||San Diego, California||QuintoAndar; Loggi|
|Riverwood Capital||San Francisco Bay Area||99|
|Redpoint Ventures||Menlo Park, California||Nubank|
|Ribbit Capital||Palo Alto, California||Nubank|
|Ruane, Cunniff & Goldfarb||New York||QuintoAndar|
|Human Capital||San Francisco||Wildlife|
|Sequoia Capital||Menlo Park, California||Nubank|
|Social Capital||Palo Alto, California||QuintoAndar|
|Softbank||Gympass; QuintoAndar; Loggi|
|TCV||Menlo Park, California||Nubank|
|Tiger Global Management||New York||Nubank|
|Thrive Capital||New York||Nubank; Loft|
|Valor Ventures||Atlanta, Georgia, US||Gympass|
Sources (Entire Series)
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